They also warned that business activity is stagnating in the United States and Europe, and point against the monetary authorities: “However, it is expected that the US Federal Reserve (Fed) and the European Central Bank (ECB) aggressively raise rates for the sole purpose of fighting inflation.
This Tuesday begins the monetary policy meeting of the Federal Reserve to define the level of the increase in the interest rate, given the results of the inflation August, which recorded a higher than expected increase, although lower than that of the previous month. The expectation focuses on the rise being around 75 basis points.
The central banks from other regions and countries could follow suit. The Bank of England will also meet next week and is expected to make a decision along the same lines as the Fed. The European Central Bank also declared in favor of maintaining a policy of high rates to contain inflation, despite fears of some of its directors that rates enter contractionary territory.
According to these analysts, “a tightening of monetary policy will cause recessions“, thus reaffirming their global approach of taking a reduced risk. “We favor credit given our view that a major default cycle is unlikely and we are underweight equities given the recessionary impact we see going forward.”
Recession
black rock foresees a mild recession in the US and a deeper one in Europe, given the energy crisis. “But we don’t think risk assets have accepted the combination of deteriorating activity and central banks.”
“We haven’t bought the falls in equities all year. The combination of an impending recession and higher rates is not yet fully reflected in equity valuations, in our view. If both factors are taken into account, we would return to being neutral in terms of the actions”, they point out.
In this sense, the international credit organizations have referred, which predict a slowdown in activity. To this was added the International Energy Agency, which forecast a slowdown in demand towards the fourth quarter of the year due to the drop in activity. In the same sense, the logistics giant, FedExwhose shares tumbled after he forecast a drop in global demand.
Source: Ambito
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